Affiliates often advertise on the same search keywords as the companies they work with. In theory, this is a great way to keep products exposed and sales continuous, but also an effective way to drive up bid prices. An example:

The toy company Splash has launched a search campaign for their newest squirt gun, the ICE-Blaster. XYZ Toys is an affiliate that will bolster online ICE-Blaster sales.

Both company’s search campaigns include the brand term ‘iceblaster’. Considering the direct relevance to the name and the highly-targeted traffic the SERP will attract, the cost-per-click (CPC) should be relatively inexpensive.

However, because Splash never established affiliate bidding and position rules with XYZ Toys, both companies instinctively bid for first position, raising the competition of the term and inadvertently increasing each other’s CPC.  Worse yet, both Splash and XYZ are sending search traffic to the same domain, Splash.com. Google will only display one ad per domain on a results page. Because Splash is bidding less on the term, their ad is not being displayed, which creates inconsistencies in impression share, spending and sales.

Splash can avoid raising CPCs and losing impressions by implementing and enforcing strategies such as controlling affiliate keyword lists, coordinating affiliate position targets, and requiring the affiliate to use a separate domain.

A well-designed affiliate strategy can significantly improve your online presence and provide cost-effective sales, but requires planning and coordination in order to be efficient and to allow you to maintain control of your brand.